A New Start

WSJ: Fashion Online Retailers Tackle The Gender Gap

see also  http://xinkaishi.typepad.com/a_new_start/2007/05/ft_why_online_f.html

ON STYLE

Fashion Online:
Retailers Tackle
The Gender Gap

By RAY A. SMITH
March 13, 2008; Page D1

This group is a retailer's dream: When shopping online, they spend more, make snap decisions -- and return less stuff.

Who are these desirable shoppers? Men.

While men and women shop differently in brick-and-mortar stores, the Internet has long been seen as offering similar speed and efficiency to both genders. But recent research by analysts and retailers has turned up significant gender differences when it comes to online shopping.

The most striking is men's need for speed. "Men tend to value their time more," says Sucharita Mulpuru, a Forrester Research Inc. analyst.

QUESTION OF THE DAY

How much of your shopping do you do online?

But men also spend more money online -- and they spend big on luxury. Such findings, coupled with the relative strength of men's apparel in general -- sales rose 4.4% to $57.2 billion last year, compared with a 1.1% increase to $103.1 billion for women's apparel, according to market researcher NPD Group -- are prompting more online fashion retailers to take aim at men.

Some retailers, such as

Italy

's Yoox Group SpA, are launching shopping sites just for men, while others, including Neiman Marcus Group Inc. and Saks Inc., are beefing up their men's sections and tweaking their sites to make it easier -- and faster -- for men to shop. Brooks Brothers, for instance, halved the time it takes for images to pop up to fractions of a second. And neimanmarcus.com now gives shoppers a way to view 52 ties at once in its new Tie Shop, instead of having to look at them nine at a time.

There are plenty of incentives. When researcher Unity Marketing of Stevens, Pa., surveyed 1,300 luxury shoppers last fall, it found that men reported spending an average of $2,401 on "fashion" -- including clothing and accessories -- online in the previous three months, compared with $1,527 for women. Unity noted that women may be more apt to bargain-hunt when it comes to fashion. And in a December survey by market researcher BIGresearch, nearly 90% of about 6,000 men said they "regularly" or "occasionally" make purchases online, compared with about 86% of 10,000 women surveyed.

Meanwhile, men return fewer items. Forrester's Ms. Mulpuru estimates that men send back fewer than 10% of their apparel purchases, while women return more than 20% of the apparel they purchase. "As long as the product is good enough, [men] are less likely to return it," she says.

Men also don't want to spend a lot of time shopping. It takes them only a third of the time it takes women to make a purchase, according to internal research conducted by Yoox, which is an operator of designer-apparel sites based in

Bologna

,

Italy

. That was just one of the findings that prompted Yoox to launch an online luxury department store just for men earlier this month. Called thecorner.com, it features shops devoted to upscale designers such as Etro, Marc Jacobs and Viktor & Rolf, along with some lesser-known names.

Men Bought Costly Items

Yoox was encouraged by other data as well. When it reviewed shopping patterns on its yoox.com site, which caters mostly to women, it discovered that half of the visitors were men, according to Chief Executive Federico Marchetti. Yoox also found that male shoppers around the world bought items that cost more than €500 ($777) more often than women, Mr. Marchetti says.

Women's clothes still get more attention on the home pages of most major retailers, such as Bergdorf Goodman's site. But some stores are starting to make their sites more appealing to men. With easier-to-navigate page views at the Tie Shop, "we wanted to give men features that allow them to see a lot of product in a short amount of time and to be able to find something online quickly, not have them clicking back and forth," says Gerald Barnes, senior vice president of Neiman Marcus Direct, which includes catalog and online divisions.

This month, Neiman Marcus is mailing its first men's spring catalog, with a goal of drawing men to its Web site. Women have long received such catalogs. In the past, Neiman Marcus says, the men's merchandise on the Web site was geared to what women would buy for the men; now, it's oriented toward the increased numbers of men who are shopping for themselves.

Bergdorf Adds Briefcases

Bergdorf, which is owned by Neiman Marcus, has added more shoes and leather goods such as briefcases to its Web site in the past year and is looking to add more suits soon.

Saks Fifth Avenue

, meanwhile, added 40 men's designer brands to its saks.com site last year, along with new categories such as tailored clothing. Sales for the men's section have since grown at a "significantly higher" rate than women's, says Denise Incandela, president of Saks Direct, the online division.

In reviewing men's shopping patterns, Saks found that they "tend to be less research-focused, more in and out in terms of buying stuff," while women spend more time looking at the site, says Ms. Incandela. That's why the women's section of the Saks site currently features three-minute fashion videos and the men's section doesn't.

'Men Are More Tactical'

Brooks Brothers has tweaked its Web site to allow both men and women to view entire outfits featured in newspaper and magazine ads, instead of having to hunt for a particular blazer, shirt and pants. While the feature is available to both sexes, company officials believe men are more likely to use it. "Men are more tactical; they want to get in and out the door fast," explains Jarid Lukin, Brooks Brothers' e-commerce manager.

Explanations for the differences in shopping styles vary, but many analysts said women browse more -- sometimes without ever buying anything. They may also do research online but actually buy their clothes at stores.

What's more, women tend to make "more of an effort" to seek out deals and promotions, says Patti Freeman Evans, senior analyst for retail at Jupiter Research in

New   York

. But overall, she sees more similarities than differences. Both men and women, she says, see the Web "as a very efficient and convenient way to shop."

Christina Binkley's On Style column will return next week.

Write to Ray A. Smith at [email protected]

http://online.wsj.com/article/SB120536741984732025.html?mod=hps_us_at_glance_pj

 

 

NY Times: Museums Refine the Art of Listening / Customer Experience in Museums

see also: http://goodexperience.com/2008/03/museums-studying-the-customer.php

Museums Refine the Art of Listening

Librado Romero/The New York Times

ON THE FLOOR Naum Gabo’s "Linear Construction in Space, No. 4," a plastic and stainless steel sculpture, draws visitors in a conventional gallery at the Whitney Museum of American Art. More Photos >

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By CAROL VOGEL

Published: March 12, 2008

 

IF it seems someone   is watching every time you go to a museum, you’re not far off.

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The Art of Listening

   

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When the Museum of Modern Art opened its expanded $450 million home on West 53rd Street three years ago, the ticket desk began compiling the ZIP code or country of origin of every visitor, putting the information in a database.  

At the Museum of Fine Arts, Boston, which is gearing up for the opening of its $345 million expansion in 2010, researchers found that besides marquee names like Picasso, van Gogh and Monet, subjects like interior design, royal jewels and Egyptian mummies pull in the crowds. And at the Detroit Institute of Arts, officials recently discovered that the average visitor spends only four or five minutes in any gallery, rather than the 20 minutes the officials had expected. Only 7 percent bothered to read the wall plaques.

While museum market research has been around for two decades, gathering data about visitors has never been as important, or as sophisticated, as it is now. As museums expand, they need more paying customers to cover ever-increasing costs. And they’re competing for those customers with local shopping malls, movie theaters, even grocery stores.

“I call it the water-park phenomenon,” said Ford Bell, president and chief executive of the American Association of Museums in Washington. “A zillion other things are competing for our leisure time. People might visit a museum to see a Monet or a toaster or a textile display — what’s important is it’s getting them in the door.”

Now, besides the reliable techniques — focus groups, exit surveys and mail-in questionnaires — museums are exploring new ways to learn what visitors want. In Detroit, which is spending $158 million on a renovation and gallery reinstallation project to be finished this fall, researchers visited local mothers in their homes to determine how to attract more families to the museum.

More common, however, is the use of software to help museums get a more accurate picture of who their visitors are.

“Now you can do 10 different surveys at the same time,” said Karin Graftstrom, market research manager in the visitor services department of the Metropolitan Museum. “You could never do that before.”  Visitor research has had an impact on everything from museum hours and the brevity of wall labels to the music played during evening hours. At some museums, it has influenced the mix of exhibitions.

At the Museum of Modern Art, Glenn D. Lowry, the director, said that it was just as important to know who is not coming to the museum as it is to know who is. 

“It’s what you’re missing,” he said. While entry information and other data showed that a healthy number of college students visited the Modern, “we were not drawing as many of the 20- to 30-years-olds that we hoped,” Mr. Lowry said. “So we went out to determine how to better communicate with them.”

This age group was visiting the Modern’s affiliate, the P.S. 1 Contemporary Art Center in Long Island City, Queens, but didn’t seem interested in the Manhattan museum. So two years ago the Modern started the “Pop Rally,” with screenings, gallery tours, collaborations with artists and concerts, including performances by Patti Smith, Chicks on Speed and Paper Rad. The museum asked its younger staff members to organize the programs.

The museum also began posting messages about “Pop Rally” and its exhibitions on the museum Web site, as well as sending e-mail and text messages. “A lot of this is a generational challenge,” said Mr. Lowry. “It’s communicating in ways that people are comfortable.”

The “Pop Rally” events have attracted 500 to 1,000 attendees, the majority from just the age group the museum had targeted. Eventually, the museum wants to find out if some of these visitors also come to see exhibitions at other times, too.

Mr. Lowry said research was helping the museum make more informed decisions about issues like opening hours, but doesn’t influence the actual kinds of exhibitions it presents.

When the Modern realized, by looking at country-of-origin data, that the number of Korean and Chinese visitors had increased significantly, it added Korean and Chinese to the six languages its brochures and guides were printed in. Officials also started offering guided tours in more languages. And by tracking the time at which visitors arrived, museum officials realized that during the holidays the ticket booths were getting especially crowded, so opening time was advanced an hour to 9:30 a.m.

By questioning visitors in its lobby as well as through the mail, the museum discovered that people don’t circulate in the ways curators would expect.

“People graze,” said Wendy Woon, deputy director for education at the Modern. “Some read labels, others don’t,” adding, “We want to give people the keys, not turn the lock. People want choice.”

So besides the traditional audio guides the museum has been offering ways of getting information on hand-held devices and cellphones. With some exhibitions, the museum set up small rooms with catalogs and other educational materials.

While serving up what audiences want may be a smart business move, there is a fear by curators that things can go too far, that catering to public opinion could dumb down a museum and supplant curatorial wisdom.   Are museums for high culture or low? Places to see Ralph Lauren’s car collection and “Star Wars” costumes, props and drawings rather than Vermeer and Renaissance tapestries?

Most institutions stress that the findings from their research have no bearing on plans for exhibitions — that the two are kept apart, a separation of church and state. “It’s all about how we present it, not what we show or don’t show,” said Nancy Price, director of marketing and communications at the Fine Arts Museums of San Francisco.

But at the Museum of Fine Arts, Boston, research does influence the mix of exhibitions presented each year. John S. Stanley, deputy director of programs and services, said the museum conducted on-site written surveys where it presents 50 ideas and lets the public comment on them. “If something scores low, for instance, we will then pair it with a show that tests high so they balance each other out,” he said.

A year and a half ago, the museum hired the marketing firm J.D. Power & Associates to try to understand what visitors want. “We found out that the No. 1 thing that gets people to the museum is our collection,” Mr. Stanley said.

The research also found that visitors had many different ideas about the best way to learn about the collection, so the museum began testing different presentation elements. “We recently put a touch screen in a Mayan exhibition to see how the public interacts with it,” Mr. Stanley said. The screens were positively received.

And because museum-goers said they liked choices other than audio guides or formal tours, Boston officials initiated “spotlight talks,” informal discussions with instructors in galleries. The museum recently tested different types of seating in the galleries, some that can be moved, some that cannot. “These might be seemingly mundane,” Mr. Stanley said. “But they are ways of getting a satisfied visitor.”

In Detroit, museum staff conducted “timing and tracking” surveys, where researchers watched to see how much time visitors spent in the galleries and how they looked at art. “That was a real wake-up call that we needed to do things differently,” said Matt Sikora, associate educator for evaluation at the museum. “The studies showed people were overwhelmed.”

So in its new galleries, the museum hung fewer works of art. Wall labels were cut to 150 words from 250. The museum even sought opinions about a video for its 18th century galleries. The video showed a period dinner, replete with Meissen porcelain and 18th century silver. A stylist created a period feast, right down to a roast pig centerpiece.

“It was meant to show the opulence of the dinner,” Mr. Sikora said. “The problem was the video was too long to engage its audience.” So it was cut to five minutes, from eight. “And the pig generated so many questions and was so distracting we left it out,” he said.

At the San Francisco Museum of Modern Art, officials have been conducting exit surveys three or four times a year for a decade. More recently, they added focus groups and online surveys. In addition to the usual intelligence, officials found that “people want to know that what they’re seeing is relevant to their life,” said Ms. Price. “This might sound simple, but it’s important for us to hear.” And something they keep in mind when programming lectures; the museum prefers to invite speakers who are well-known in the community.

When they know that an exhibition might be particularly challenging, museum officials introduce “learning lounges, rooms next to the galleries with catalogs and excerpts of artists talking,” she said. “And when we had the Matthew Barney show we presented a variety of different ways to access the audio guide, through iPods and cellphones as well as traditional audio guides, tools that were especially familiar to its under-35 audience.”

Research also showed officials in San Francisco that one of the best ways to reach audiences is by placing banners around the city. “We hear it from tourists and we hear it from folks in town, members and nonmembers,” Ms. Price said.

Now, as the museum prepares for a Frida Kahlo retrospective in June, it is trying to figure out how to best serve what it anticipates will be an unusually large number of visitors. It will stay open until 10 p.m. on Thursday nights, rather than the usual 8:45 p.m. And curators are grappling with how best to install the show. Do they mount the paintings higher so they will be visible from a distance? And what about the wall labels? How long should they be and where will it be the easiest to see them?

In the end, Ms. Price said, the answers to those and other questions come from research — “studying ways our visitors can best access art and information.”

FT: Nokia on heaven's door

Yet in the developed world, telecoms operators, rightly, see phone maker Nokia's move into services such as music downloads and maps as a threat.

However, there may be a greater opportunity for the Finnish phone maker in the developing world...

Nokia dominates many emerging markets...

==

Nokia on heaven's door

Published: March 13 2008 02:00 | Last updated: March 13 2008 02:00

Downloading Christina Aguilera videos to your mobile phone is so, like, old. For Nokia, a Mumbai car pooling service powered by text messaging may be a far more telling glimpse of the future.

Mobile phone users are increasingly using their phones to surf the net and send e-mail, rather than just make calls. Improvements in screen sizes and interfaces are prompting a big increase in data usage in developed markets. Yet in the developed world, telecoms operators, rightly, see phone maker Nokia's move into services such as music downloads and maps as a threat.

However, there may be a greater opportunity for the Finnish phone maker in the developing world. In many areas fixed infrastructure is lacking - there is less than one land line available for every hundred Bangladeshis. So for huge numbers of people the first experience of the internet is likely to be through a mobile phone. This suggests a significant market for basic services such as e-mail, as well as one for localised information services, such as finding fellow commuters, or checking fish prices at nearby markets.

Nokia dominates many emerging markets, claiming about two-thirds of handset sales in India and more than 40 per cent in China, for example. Subscriber growth - Gartner, the technology research company, expects penetration rates in Africa to jump from 30 per cent last year to 45 per cent by 2011, for instance - means inexperienced operators may be more prepared to work with Nokia. Having spent more than $8bn on acquisitions in the last two years to build up its service and software division, it can pitch itself as a partner with ready-made services for operators to sell, in return for a share of revenues.

This will take time. Fast networks are needed and, even in China, the issuing of 3G licences remains more expectation than reality. Business models are yet to be fleshed out, and competitive tensions will not simply evaporate. But if a sizeable chunk of the next billion users to access the internet do so through Nokia, the rewards will be significant.

FT: Armani swims against the tide

So although Armani Exchange accounts for 2,000 people of the 7,000 who work on Armani brands, Giorgio Armani and Emporio Armani have 70 per cent of the advertising and promotional budget. (Exchange is only 25 per cent owned by Armani so technically its people are not employed by the group.)

This mirrors wholesale revenues. Giorgio Armani and Emporio Armani accounted for 63 per cent of the €1.6bn consolidated revenues in 2006.

Mr Hooks says Armani wants "brand extension not brand stretching" and acknowledges that "there is always a danger of being ripped apart" by dilution. Expansion of brands is also carefully controlled to protect the top. Armani Exchange only opened in the UK and Japan, for example, once the more luxurious brands were present. "We never allow [Exchange] to go into markets where the other brands are not well established," says Mr Hooks.

Rivals such as Tommy Hilfiger, fashion experts say, have had mixed success in moving upmarket when they were already strongly associated with the lower end.

Even Armani Exchange's products have been carefully controlled. It had almost no perfumes, watches, sunglasses or underwear for some time, for fear of damaging the attraction of items that often act as entry points into the more upmarket brands. Now Armani is confident that Armani Exchange can offer sunglasses, but it makes sure they are not available in the same department stores that sell Emporio Armani eyewear.

Having laid down the rules, though, Mr Armani is starting to break them. Five Armani superstores are open or planned in Milan, Munich, Hong Kong, Tokyo and New York, each housing a selection of the brands, which are kept apart internally. Like Versace and Bulgari, Mr Armani is expanding the top of the range by opening hotels and resorts. Armani is also selling property in Dubai.

Today's rules could be forgotten tomorrow, Mr Hooks freely acknowledges. "Fashion by its very nature is precarious, the ground is always crumbling below our feet. You have to constantly reinvent yourself."

==

Armani swims against the tide

By Adrian Michaels

Published: March 13 2008 02:00 | Last updated: March 13 2008 02:00

Fancy shopping for your next holiday in Spain? Try some red swimming trunks from the "Ibiza Style" section of Armani Exchange's website, part of the "sexy looks" on offer that are "perfect" for a Spanish island often associated with the young British booze-and-clubbing brigade. It is a world away from the "formal elegance" and "aristocratic mindset" of the clothes on offer from website of the upscale, chic Giorgio Armani brand.

Italian fashion companies, facing the threat of cheaper production in emerging markets such as China, have been moving ever upmarket for some time. In recent years Versace has closed down seven of its lower-end lines and diversified into new luxury markets such as hotels. Renzo Rosso of Diesel has added to his famous jeans by signing up designers and pushing into other lines of luxury clothing.

The purpose has been to preserve margins and the cachet of "Made in Italy", but Armani stands apart from this trend. Giorgio Armani, the 73-year-old founder of the fashion empire that bears his name, is scrapping for business at all levels - from the top to the bottom of the fashion world.

Armani pursues a distinctive strategy by targeting the entire spectrum of consumers and incomes through five distinct brands. Giorgio Armani, the top-end luxury brand, sees itself as competing against Chanel or Hermès (to avoid confusion, company insiders refer to this brand by its full name and the company owner only as "Mr Armani"). Emporio Armani is the top offering of more fashionable items, competing with Dolce & Gabbana. Armani Collezioni sits below Giorgio Armani, representing a more affordable and accessible elegance, portraying itself in the same league as Hugo Boss or Burberry. Armani Jeans' casualwear competes with Diesel or Tommy Hilfiger. And Armani Exchange is the group's "fast fashion" chain, vying with names such as French Connection and Banana Republic.

The group aims for a sharp delineation of its business segments, developing each into a complete offering of clothing and accessories. John Hooks, deputy managing director, views that as the route to growth. "We have a very respectable presence in each segment of the market and that's what we can build on."

But such a strategy requires great care: how does a company sell Armani Exchange underwear to American or Japanese teenagers without detracting from the prestige of the Giorgio Armani brand and deterring richer customers from visiting its exclusive stores?

Mr Hooks, in a rare interview covering Armani's management strategy, says it demands great discipline. Developing five lines of business requires five approaches to everything the group does, from property location, design of stores and staff training to ambience, logistics, financing and packaging.

Giorgio Armani, for example, is generally available only in stand-alone stores in select locations. It is about the "the purity of the experience", says Mr Hooks.

In the UK, customers can shop for Armani Collezioni in department stores and outside London but Giorgio Armani is available only in the country's sole store on Sloane Street in the capital. In New York, Giorgio Armani and Emporio Armani sit alongside other smart boutiques on Madison Avenue, staffed by finely tailored and attentive employees, trained to explain the cut of the clothing. By contrast, the staff at 5th Avenue's Armani Exchange, which reverberates with pop music, tend to be younger and trendier. Employees, says Mr Hooks, are promoted within a brand and do not typically jump between them.

In earlier fashion eras, he says, the difference could be more easily discerned in the products on offer. The top luxury brands might only produce evening wear or work clothes. But now you can buy jeans - in Japanese denim at $500 - in Giorgio Armani as well as lower-quality jeans made in China for $90 at Armani Exchange.

"There is a very subtle classification going on that is much less apparent than before," Mr Hook says. "It complicates things enormously but it also makes things much more exciting."

Apart from the quality of the denim, those Giorgio Armani jeans will be presented differently, perhaps in very small piles, laid out in intimate shopping areas designed with luxuriant glossy materials such as limestone, marble or pleated satin.

Advertising campaigns also diverge. Giorgio Armani is placed in lifestyle magazines and never on the internet or on billboards or outdoors. By contrast, almost all of Milan's billboards appear to be adorned with semi-dressed famous footballers and models wearing products from Armani Jeans. And in Armani Exchange's advertising, "people are not that dressed actually", Mr Hooks quips.

Logistics and distribution are another area where different rules apply for different brands. A dress in a Giorgio Armani store that costs €5,000 ($7,670), might be moved, singly, from a store in Antwerp to Brussels. "You don't do that for jeans," Mr Hooks says.

But for all the group's commitment to the cheaper ranges, Giorgio Armani and Emporio Armani still have the lion's share of communication and marketing effort. One of the group's golden rules is that broadening out at the bottom of the market can only be done by reinforcing and promoting the top to protect the brand.

So although Armani Exchange accounts for 2,000 people of the 7,000 who work on Armani brands, Giorgio Armani and Emporio Armani have 70 per cent of the advertising and promotional budget. (Exchange is only 25 per cent owned by Armani so technically its people are not employed by the group.)

This mirrors wholesale revenues. Giorgio Armani and Emporio Armani accounted for 63 per cent of the €1.6bn consolidated revenues in 2006.

Mr Hooks says Armani wants "brand extension not brand stretching" and acknowledges that "there is always a danger of being ripped apart" by dilution. Expansion of brands is also carefully controlled to protect the top. Armani Exchange only opened in the UK and Japan, for example, once the more luxurious brands were present. "We never allow [Exchange] to go into markets where the other brands are not well established," says Mr Hooks.

Rivals such as Tommy Hilfiger, fashion experts say, have had mixed success in moving upmarket when they were already strongly associated with the lower end.

Even Armani Exchange's products have been carefully controlled. It had almost no perfumes, watches, sunglasses or underwear for some time, for fear of damaging the attraction of items that often act as entry points into the more upmarket brands. Now Armani is confident that Armani Exchange can offer sunglasses, but it makes sure they are not available in the same department stores that sell Emporio Armani eyewear.

Having laid down the rules, though, Mr Armani is starting to break them. Five Armani superstores are open or planned in Milan, Munich, Hong Kong, Tokyo and New York, each housing a selection of the brands, which are kept apart internally. Like Versace and Bulgari, Mr Armani is expanding the top of the range by opening hotels and resorts. Armani is also selling property in Dubai.

Today's rules could be forgotten tomorrow, Mr Hooks freely acknowledges. "Fashion by its very nature is precarious, the ground is always crumbling below our feet. You have to constantly reinvent yourself."

Copyright The Financial Times Limited 2008

FT: Seek hidden value, not surface glitter

Seek hidden value, not surface glitter

By Luke Johnson

Published: March 4 2008 19:44 | Last updated: March 4 2008 19:44

Not long ago I was visited by a former management consultant who had gone into the health food industry. He had no experience of running a company, but that didn’t put him off. He had raised significant funding for his start-up concept and had rolled out a number of branches.

In spite of a very slick business plan, though, it was apparent to me after half an hour that the economics of his retail model were fundamentally flawed. Clearly his backers were wowed by his trendy proposition, and forgot to verify the basics. His company went bust last week.

This was a classic example of the “counter-presentational principle”, a theory propounded by Richard Oldworth in his excellent new investment book, Simple But Not Easy. This states that the ability of managers to do their job may be in inverse relationship to their ability to present well at meetings. In other words, just because an entrepreneur has produced a glossy document and possesses a fluent sales pitch, it does not necessarily follow that they will make investors money.

In a sense this is merely a variation on the ancient maxim, “Beware form over substance”. In other words, look at the underlying reality rather than the surface appearance of things. Like most such aphorisms, putting it into action takes work. We live in a visual age, when too often the superficial triumphs over the profound, but falling for the trivial rather than the serious can be deadly in enterprise.

This dictum can be applied to many aspects of commercial life, not just the appraisal of business plans. In interviews, I find it pays to probe beyond the smart suit, prepared CV and scripted answers, and get a real feel for the individual and his or her true capabilities. Taking genuinely independent references is essential. In buying IT services you should ignore the sexy features and drill down to ensure the system works and is operational on time and budget. When looking at an acquisition, ignore the packaging and examine the contents. It requires effort but can prevent expensive mistakes.

Terry Smith, who runs the UK inter-dealer broker Tullett Prebon, once told me his footwear test of investment analysis: back the captain of industry who wears practical shoes with plastic soles, rather than the one who wears ultra-posh brogues from Church’s. The former visits factories to find out what’s going on; the latter is unlikely to be found outside London’s West End. Do not be fooled by a clipped accent and a confident manner.

Of course, finance has always been susceptible to the ebb and flow of fashion – perhaps more than the rag trade. Companies and investors will rush towards the latest fad as moths to a candle; that is how bubbles are created. Exponential growth is always the magic ingredient, be it the dotcom boom, China or alternative energy. No doubt the internet, the Asian economic miracle and wind power will all grow, but that does not mean that you can make money out of them, especially if promoters have intermediated matters and taken the best profits.

From time to time we all get seduced by ever-upwards projections of sales and profits. But few undertakings meet their founders’ bullish expectations. Life has a tendency to interrupt. So many of us believe we are better at predicting the future than we really are.

My preference is to target established but unloved and cheap situations that are out of favour and represent real value. Last week I saw an analyst’s circular covering two stocks in the UK support services industry. It recommended selling Hays, at 8.5 times earnings, yielding 5 per cent, and buying Serco, at 22 times earnings, with a yield of less than 1 per cent.

Although Serco is an excellent company, I would be tempted to do the opposite of the broker’s advice. By temperament I prefer to avoid “hot” sectors, and entirely agree with another of Mr Oldfield’s rules of thumb: “A share whose price has gone down is prima facie more interesting than before it went down.”

In my opinion the same principle applies when buying private companies: avoid popular spots where the crowd gathers. Take the long-term view, search for neglected opportunities and back good people.

E-mail: Luke Johnson
The writer is chairman of Channel 4 and runs Risk Capital Partners, a private equity firm

FT: Sponsors with a taste for Mickey Mouse marketing

Sponsors with a taste for Mickey Mouse marketing

By Matthew Garrahan

Published: March 5 2008 02:00 | Last updated: March 5 2008 02:00

At first glance, Walt Disneywould appear to have little in common with Siemens, the German industrial conglomerate that makes everything from light bulbs to hearing aids.

Yet a Siemens logo proudly adorns the newly relaunched Spaceship Earth attraction at Disney's Epcot theme park in Florida. It can also be seen on the Disney website, where visitors to the Spaceship Earth section can take part in the "Siemens Science Minute" or "Be a Siemens Superhero".

Siemens is one of Disney's "corporate alliance" partners alongside companies that include Coca-Cola, Hewlett-Packard, General Motors and Kodak. The partners pay fees to Disney running into hundreds of millions of dollars in return for promotion, sponsorship and access to its millions of customers.

The Siemens deal represents a change from the German company's former focus on sports sponsorship and offered it a way to benefit from a mix of traditionally distinct marketing opportunities. The relaunch at Epcot is the latest development in a 12-year deal that, unlike a more typical sports sponsorship, works on several fronts and across different media.

Siemens medical products have appeared in Grey's Anatomy , the Disney-ABC medical drama, while Disney characters have been used to sell hearing aids made by Siemens.

The deal has developed to included the Spaceship Earth website and other businesses that operate under the Disney banner. "We have really expanded this relationship far beyond the theme park," says George Nulton, chief executive of Siemens's US division.

Although it operates a vast array of businesses in the US, Siemens is not well known by American consumers. As a former shirt sponsor of Real Madrid in Spain, it initially considered sponsoring a US sports event to raise brand awareness.

"There were many opportunities to get involved with sport, whether in motor racing or by sponsoring a stadium," says Mr Nulton. However, the group eventually chose Disney because it gave Siemens the ability to showcase its technological expertise and reach a broader, more diverse audience.

Sport is beloved by advertisers and this year will be responsible for 70 per cent of all spending on sponsorship, equivalent to $11.6bn (£5.8bn), according to consultancy IEG. But Disney hopes to win business from companies that would normally sponsor a sports event or attach their names to a stadium.

"A lot of people are going to be missing [if you sponsor a sports event] whereas the Disney brand appeals to families," says Laurence Aldridge, Disney's senior vice-president of corporate alliances. "And with ESPN [Disney's cable sports network] you have a sports brand that has access to men."

Sport appeals to sponsors because it attracts passionate people and Mr Aldridge says the same is true of Disney. "The consumer [at a Disney park] is in a magical environment . . . you can connect with them in a state of heightened emotion and that's going to be much more effective than eyeballs on a screen."

The range of businesses owned by Disney gives the group an advantage over a sports event in the competition for sponsors. It can showcase brands in its theme parks or in the TV programmes and films it makes via product placements. Crucially, the Disney brand also has broad appeal.

Disney has a long history of corporate partners. Walt Disney enlisted ABC and Coca-Cola to help finance his first theme park in the 1950s after promising promotional opportunities using the Disney brand. An innovative marketing deal was struck: Coca-Cola was given rights to be the sole supplier of soft drinks within the park in return for its backing while ABC agreed to invest after Disney promised to make a weekly TV show for the network.

Fifty years on, Disney and Coca-Cola continue as partners, while ABC is now part of the media group. Disney is keen to add more corporate partners to the existing alliances, particularly in Europe and Asia.

The relationship with General Motors dates back to 1982, when the company sponsored the Test Track ride at Epcot in Florida. Since then, the agreement has expanded considerably: Disney's fleet of company cars is supplied by GM, which also provides environmentally friendly fuel-cell cars to be used at Disney's parks.

GM cars also feature in some of Disney's studio movies - the stars of the new Martin Lawrence film, College Road Trip , drive a Chevrolet Tahoe - and at promotional events. The Jonas Brothers, a teenage pop act contracted to Disney, recently played a concert for GM staff and its clients at the Disney studio buildings in Burbank.

Much as the International Olympic Committee does sponsorship deals for particular categories, Disney's corporate partners get exclusivity. So Disney has a deal with HP but will not do a similar deal with an HP rival.

Contracts with corporate alliance partners that last for years can be worth hundreds of millions of dollars and often include purchasing agreements. Disney spends $12bn a year on goods and services and the company's alliance partners are often at the front of the queue when the group comes to place orders.

This increases its appeal to sponsors, the group says. Tom Staggs, Disney's chief operating officer, declines to comment on the value of the group's corporate partnerships. But he acknowledges the business is a growing and important revenue stream. "It can be a real growth area for us and is consistent with what sets Disney apart from other media companies."

Copyright The Financial Times Limited 2008

FT: The nuts and bolts of growth

Mr Würth relied from the beginning on an army of salesmen - now with more than 30,000, the largest full-time employed salesforce in the world - to create relationships with professional customers such as mechanics and small workshops. To this day the average sale at Würth is for just five articles with a value of about €200 - but there are 20,000 such orders daily.

"In a recession demand on screws goes down by maybe 2 per cent, but we can gain market share. Nobody in this company is allowed to talk about the economy or recession as excuses."

In his view, low-cost competitors, such as those in

China

, cannot compete with Würth because they fail to provide the quality the small workshops need. Even if they could, he adds, they would not enjoy the close relationship a Würth salesman cultivates with his customers. And the internet has yet to damage the model; mechanics still prefer to see a human face than order their products over the web.

Mr Würth says he learned his entrepreneurial skills on the job - "my university was life" - but says he devoured management and economics books from an early age. One of his favourites is von Clausewitz's On War :

"Von Clausewitz writes that if you have to defend a fortress of the empire and you are surrounded by enemies you should send out a minor part of your troops to engage the enemy as far away as possible to enable the rest of your troops time to prepare."

He put this into practice to defend his business of selling to professional customers - a highly profitable market. Mr Würth started by selling bulk industry products to large manufacturers, a lower margin business and one he didn't care much about. "But it kept our competitors very busy so that they didn't even entertain the idea of going to our main customers," he recounts with glee.

He espouses a broader belief that innovation and efficiency can only thrive when employees are given their head. Divisions at Würth operate with a unusual degree of latitude, a decision he says has paid off: "The more successful the worker is, the more freedom he or she receives. It is one of the strengths of this company that we can run it in a decentralised manner but if something goes wrong we switch to centralised mode immediately - be it helping an individual or a country." When trouble looms, task forces are sent out straightaway to assess the problem. This happened recently when dozens of employees in

Canada

left the company for no apparent reason.

Mr Würth's longer-term aim is a desire to give all workers a vision they can share. But it comes with strings attached, in this case an eye-watering target of €22.5bn in revenues by 2017: "If the management doesn't think that a company can grow by 15-20 per cent then it won't happen," he says.

"The balance sheet is just a mirror of how management thinks. I happen to believe any company that doesn't grow by 10 per cent annually is sick."

 

 

==

 

The nuts and bolts of growth

By Richard Milne

Published: March 5 2008 02:00 | Last updated: March 5 2008 02:00

Reinhold Würth likes setting targets. For more than five decades one of

Germany

's best-known entrepreneurs has driven growth at Würth - the world's largest seller of screws, nuts, bolts and other fasteners - by setting seemingly daunting 10-year goals for workers.

In 1987, Würth made DM1.4bn (€700m) in revenues and Mr Würth came up with a bold prediction: by 2000 the German group would make DM10bn. "Workers looked at me like I was mad," he says. But when the accounts closed in early 2000 Würth had hit the number.

Mr Würth, 72, has sustained an entrepreneurial spirit in the company, despite it being based in one of the most basic industries in the world: selling fasteners and other products to workshops around the world. His formula has been a simple business model, the early pursuit of internationalisation and a focus on innovation to repel the threat of low-cost competitors.

Würth has enjoyed a compound annual growth rate of 25 per cent since he took over from his father in 1954. This year it is on target to make €9.4bn($14.3bn)."When you think we don't sell anything high-tech - just screws, dowel pins and machine tools - it is a little astounding," says Mr Würth, who still owns the company despite stepping back from day-to-day management.

Mr Würth's business story began at the age of 14, when he left school to start an apprenticeship at the company his father had just founded. Five years later, on his father's death, he found himself in charge of two other workers. In his first full year the business grew by 20 per cent and has never looked back. The company now employs 63,000 people worldwide; Mr Würth, meanwhile, became a professor of entrepreneurship at the

University

of

Karlsruhe

and a prominent business figure in

Germany

, with a penchant for Harley-Davidsons and collecting modern art.

Würth's innovative business model was based on outsourcing - before the word was coined. Instead of making its own products, it would get suppliers to do it for them and then market them under the Würth brand. The key, he says, is a focus on being the best. "Quality beats price is our motto," says Mr Würth, in an office adorned with modern art at the company's headquarters in the rural southern German town of

Künzelsau

. "We never went into low-cost, as our customers would never have understood it."

His earliest obstacle was simply finding the products.

Germany

was in its post-second world war boom and it was difficult to keep up with demand. "It was sometimes harder to buy the products than to sell them," he says.

Mr Würth relied from the beginning on an army of salesmen - now with more than 30,000, the largest full-time employed salesforce in the world - to create relationships with professional customers such as mechanics and small workshops. To this day the average sale at Würth is for just five articles with a value of about €200 - but there are 20,000 such orders daily.

Mr Würth spotted an opportunity to expand the business abroad, opening a subsidiary in the

Netherlands

in 1962. Würth today has 400 subsidiaries in 86 countries from

Costa Rica

to

Indonesia

. "We went international before the word 'globalisation' even existed," he says. Würth operates in what he calls a "polypoly" (in contrast to an oligopoly) in that his main competitors are the hundreds of thousands of local companies supplying workshops with material. "In this scenario it is not so difficult to win market share. We don't need any market studies from McKinsey or the like to help us," he says.

Würth's market share is 5 per cent in

Germany

and less abroad; Mr Würth believes it can always be improved and woe betide any manager who disputes his targets: "In a recession demand on screws goes down by maybe 2 per cent, but we can gain market share. Nobody in this company is allowed to talk about the economy or recession as excuses."

In his view, low-cost competitors, such as those in

China

, cannot compete with Würth because they fail to provide the quality the small workshops need. Even if they could, he adds, they would not enjoy the close relationship a Würth salesman cultivates with his customers. And the internet has yet to damage the model; mechanics still prefer to see a human face than order their products over the web.

Mr Würth says he learned his entrepreneurial skills on the job - "my university was life" - but says he devoured management and economics books from an early age. One of his favourites is von Clausewitz's On War :

"Von Clausewitz writes that if you have to defend a fortress of the empire and you are surrounded by enemies you should send out a minor part of your troops to engage the enemy as far away as possible to enable the rest of your troops time to prepare."

He put this into practice to defend his business of selling to professional customers - a highly profitable market. Mr Würth started by selling bulk industry products to large manufacturers, a lower margin business and one he didn't care much about. "But it kept our competitors very busy so that they didn't even entertain the idea of going to our main customers," he recounts with glee.

Not everything has been plain sailing. In the early 1970s he had to close Würth Bau, the construction subsidiary he had built up, with a loss of DM10m and 250 workers. But despite not being directly involved, he went to see the workers himself and afterwards found new jobs for nearly all of them. "Even though I wasn't involved I took political responsibility for it. People knew that when Mr Würth says he has to close [a plant] he has looked at all other options," he says.

He espouses a broader belief that innovation and efficiency can only thrive when employees are given their head. Divisions at Würth operate with a unusual degree of latitude, a decision he says has paid off: "The more successful the worker is, the more freedom he or she receives. It is one of the strengths of this company that we can run it in a decentralised manner but if something goes wrong we switch to centralised mode immediately - be it helping an individual or a country." When trouble looms, task forces are sent out straightaway to assess the problem. This happened recently when dozens of employees in

Canada

left the company for no apparent reason.

Mr Würth's longer-term aim is a desire to give all workers a vision they can share. But it comes with strings attached, in this case an eye-watering target of €22.5bn in revenues by 2017: "If the management doesn't think that a company can grow by 15-20 per cent then it won't happen," he says.

"The balance sheet is just a mirror of how management thinks. I happen to believe any company that doesn't grow by 10 per cent annually is sick."

Cash bonuses, flights and art galleries keep workers inspired

Worker motivation is a pet topic of Reinhold Würth. He says that when there are rumours of workers being unmotivated, in 95 per cent of cases it is because "they have nothing to do".

He adds: "It is like children in a sandbox. They are angry because they have nothing to do until you bring along a Lego box and then they are happy. It is the same for people of 30, 40 or 50. People need to have challenges."

He believes in rewarding managers when they have worked hard. This ranges from the commonplace - every worker at Würth's logistics centre in Künzelsau received a €65 bonus in January as revenues in

Germany

rose by 8 per cent to €94m - to the extravagant: every two years the top workers and their spouses are flown to a different location - the next is

South Africa

- for conferences and sightseeing.

Motivational initiatives extend beyond work to art galleries in various national headquarters filled with work bought by Mr Würth, who has amassed one of the largest modern art collections in

Germany

with 11,000 works.

Copyright The Financial Times Limited 2008

 

JY Pillay

see also http://xinkaishi.typepad.com/a_new_start/2006/11/jy_pillay.html

==

March 7, 2008

PEOPLE & POLITICS The pioneering 'government wallah'

A civil servant who became a finance regulator, and then a corporate chief when he made SIA a great way to fly, J.Y. Pillay looks back at his own 'baptism of fire' in public service and explains why the current sub-prime mortgage crisis gives him a sense of deja vu

By Chua Mui Hoong

MR J.Y. Pillay looks at the current turmoil in financial markets over American sub-prime mortgages and reckons there's something very familiar about the way things are working out. To be precise, it reminds him of his own 'baptism of fire' in late 1985. This was when the Singapore stock market was rocked by the Pan-El crisis and the exchange was closed for three days. Pan-Electric Industries, a holding company linked to Malaysia's political party, the Malaysian Chinese Association, collapsed under a mountain of debt and dubious forward contracts. Mr Pillay was then a 'greenhorn' managing director of the regulatory body, Monetary Authority of Singapore, and responsible for putting together a rescue package to prevent the brokerage industry from collapsing. In any booming market, says Mr Pillay, expectations build up to a crescendo that becomes unsustainable, tempting investors to make unwise decisions. In the current sub-prime market, as in the Pan-El crisis 23 years ago, 'clearly there have been excesses, including by investors who were seduced into believing that they were on to a good thing'. He offers this bit of home-spun wisdom: 'If the returns are a little too attractive, you should feel a little hesitant instead of plunging in. Exercise prudence, especially when you don't know what exactly you're plunging into.' His own investment policy is simple: he leaves it to the professional fund managers. At 74, Mr Pillay has been there, done that. He started life as a public works engineer in 1959, in the colonial service in Kuala Lumpur. From KL, he heard that Singapore's new government was recruiting and that it was a good place to work. Some friends from London days, where he was at university, were working in Singapore. One of them, Dr Goh Keng Swee, who would later become Singapore's deputy prime minister, said: Come. Mr Pillay got a job in the newly set-up Economic Development Board in 1961 and never looked back. He has served in the Finance, National Development and Defence ministries. Ask him about the early pioneering days and he says that he was too low down the hierarchy to have much influence, and can offer his view only as an 'observer', not a mover or shaker. Indeed, this unassuming, rather modest man questions if Singaporeans will be interested to read about the doings of a 'government wallah', as he once described himself. The retired permanent secretary is incisive and analytical, picking his words carefully - not for fear of offending anyone, but because he clearly values precision in thought and language. He is not a natural raconteur, and so the interview is less anecdotal than might have been expected of someone who spent 34 years in the Singapore public service, including chequered years at the start-up of Singapore Airlines. Of his SIA days, he says he is proudest of the legacy of strong management left behind. That the airline has weathered storms and soared through turbulence is clearly a source of pride for Mr Pillay, who was midwife at its birth after Singapore separated from Malaysia when the two countries decided to have their own airlines. He was to helm SIA as chairman from 1972 to 1996. Mr Pillay's forte is his power of analysis: his ability to cut to the core of an issue, pick it up, metaphorically speaking, and examine it from different angles. For example, how does a Catholic like Mr Pillay square his religion with his Government's policies on something like abortion, which was debated in the 1970s and passed into law when Mr Pillay was already very senior in the hierarchy? He responds by telling a story of the late Belgian king Baudouin, a devout Catholic who declined to sign a law from Parliament that legalised abortion. As this would have sparked a constitutional crisis, the king took the advice of the wily prime minister to abdicate for a day, when Parliament passed the law. The king was prepared to give up his throne for his principle - but the compromise of a day's abdication was 'a good, neat way out of the dilemma', noted Mr Pillay. As for himself, he says he has never been in the position where he was asked to do anything against his principles. The abortion law was not under his purview, although when the topic arose with colleagues and friends, he would speak his mind. But he saw no need to mobilise others against a policy his own religion opposed, as he did not see that as the role of a civil servant. But supposing - for the sake of argument - that there was some hypothetical issue over which a conflict arose between his duty and his conscience. In that case, he said, he had faith that this Government would not force him to act against his principles. One example he cited was the way public sector doctors were allowed to decline performing abortions. And so, in a few minutes, Mr Pillay sums up what moral philosophers take tomes to go through, and comes up with a practical way of living as a person of faith in a secular public service that he reckons satisfies both his bosses and his God. As for Mr Goh Chok Tong's description of Mr Pillay as the 'perm sec best able to stand up to his prime minister', Mr Pillay's brow furrows and he admits: ' I don't know why he said that. It makes me sound like I am looking for trouble! The truth is I am a peaceable person.' [email protected]

March 7, 2008

On luck, neutrality and Pan-El crisis

MR PILLAY shares his thoughts on the role luck plays in Singapore's early industrialisation efforts, why civil servants cannot be politically neutral and the Pan-El crisis. Luck plays a part in success When we look back at Singapore's early economic history and industrialisation efforts, to what extent were our successes due to foresight and planning, due to a response in circumstance or due to luck? I think more of the second and third factors. It's just as well because if you try to predetermine your winners, the higher the chance you lose it. But I think where we do rather well is that after there's been some movement to enable us to figure out that this is the way of the future or we think this is going to be the way of the future, we can latch on to it, generally we have been successful and we've not had to spend too much of our own money in a fruitless search for the successful formula. We created the conditions, the infrastructure, the appropriate laws and regulations and, of course, fiscal incentives. And the private sector, worldwide, has responded. So we have been quite good at that. Of course what we may say afterwards is something else! We might have preened ourselves and said we anticipated it. No harm done, a little bit of poetic licence is okay. The politics of public service You once said the civil servant is the handmaiden of the politician. Do you still hold that view of the mandarin-minister relationship? Yes, of course. Our rulers believe that they have the mandate to set the national agenda, and they do so. In the civil service, we are committed to the government in power and that government is led by a party which enjoys a mandate from the people. So there's no question of the civil servant questioning the authority of the people who are elected to rule. They have set the agenda, so be it. If they want to consult, they consult pretty extensively while the civil servant's role lies in the formulation of policy. He is responsible for the formulation of policy under the direction of the political leadership. In this sense, the ministers decide policy. The civil service converts the ideas and the intentions and the ambitions of the leadership into a workable and defensible programme that can be implemented. How about the public? Does the civil service have any accountability to the public? The accountability lies within the internal hierarchy, because each person has an accountability to his unit and to the person who exercises authority in that unit, and that's how the chain goes all the way up to the permanent secretary. Beyond that, the ultimate accountability of the public service lies through the politicians, in the ballot box. Because if the public is not satisfied, well, then out goes the old bunch and in comes a new one. It seems you are saying the civil service aligns itself with the political leadership in carrying out policy. What does this do to the ideal of a neutral civil service? How do you remain impartial? Very interesting point. I want to draw the distinction between being neutral and being impartial. When we say we are impartial as civil servants, we mean that we treat everybody alike and there's no difference between one citizen and another. Neutrality is a different concept. We cannot be neutral in terms of policy because, as I said earlier, we are the people who implement the agenda of the government, of the political leadership. We have the duty to do so because that is our oath of office, and the government has the mandate of the people. So there's no question of being neutral in policy, in implementing the national agenda. We have to accept that the elected politicians have the authority to determine policy for us and to require us to implement it. There's no grey area there. The civil service is not neutral because once the political party has been elected, its mandate, its manifesto, its agenda, have to be accepted by the civil service. We don't query that. Why do you consider Pan-El your baptism of fire? I was new to the Monetary Authority of Singapore. I was a greenhorn! The year 1985 was a time of some excitement in the market, the index was rising, so people thought they could buy now and sell later at a higher price, of course, the usual expectation. The trades were being conducted on a daisy-chain basis. Trades were being made without any margins, no need for collateral, but solely on the brokers' assessment of the investors' financial situations. This means the brokers were exposed to the risk themselves. It built up to a crescendo and became unsustainable. The problem was not so much that the market itself was going to crash but that the brokerage industry would collapse because the brokers were all heavily exposed and there was not enough transparency about the transactions. This is something similar to what is being faced now in the so-called sub-prime market, with the collateralisation and the securitisation of debt. The similarity lies in the lack of transparency in the market now, as there was then: not enough disclosure, the difficulty of finding out who owes what and to whom and what is the quality of the instrument. Clearly, there have been excesses, including by investors who were seduced into believing that they were on to a good thing - then and now. If the returns are a little too attractive, you should feel a little hesitant instead of plunging in. Exercise prudence, especially when you don't know what exactly you're plunging into.

Excerpt

(Source: Reading Lolita in Tehran, Azar Nafisi)

Why did I stop teaching so suddenly? I had asked myself this question many times. Was it the declining quality of the university? The ever-increasing indifference among the remaining faculty and students? The daily struggle against arbitrary rules and restrictions?

....

For a long time I had dreamt of creating a special class, one that would give me the freedoms denied me in the classes I taught... I wanted to teach a handful of selected students wholly committed to the study of literature, students who were not handpicked by the government, who had not chosen English literature simply because they had not been accepted in other fields or because they thought an English degree would be a good career move.

.....

I was reminded of a painter friend who had started her career by depicting scenes from life, mainly deserted rooms, abandoned houses and discarded photographs of women. Gradually, her work became more abstract, and in her last exhibition, her paintings were splashes of rebellious color, like the two in my living room, dark patches with little droplets of blue. I asked about her progress from modern realism to abstraction. Reality has become so intolerable, she said, so bleak, that all I can paint now are the colors of my dreams.

The colors of my dreams, I repeated to myself, stepping out of the shower and onto the cool tiles. I liked that. How many people get a chance to paint the colors of their dreams? I put on my oversize bathrobe-it felt good to move from the security of the embracing water to the protective cover of a bathrobe wrapped around my body. I walked barefoot into the kitchen, poured some coffee into my favorite mug, the one with red strawberries, and sat down forgetfully on the divan in the hall.

This class was the color of my dreams. It entailed an active withdrawal from a reality that had turned hostile. I wanted very badly to hold on to my rare mood of jubilance and optimism. For in the back of my mind, I didn\'t know what awaited me at the end of this project. You are aware, a friend had said, that you are more and more withdrawing into yourself, and now that you have cut your relations with the university, your whole contact with the outside world will be mainly restricted to one room. Where will you go from here? he had asked. Withdrawal into one\'s dreams could be dangerous, I reflected, padding into the bedroom to change; this I had learned from Nabokov\'s crazy dreamers, like Kinbote and Humbert.

In selecting my students, I did not take into consideration their ideological or religious backgrounds. Later, I would count it as the class\'s great achievement that such a mixed group, with different and at times conflicting backgrounds, personal as well as religious and social, remained so loyal to its goals and ideals.

One reason for my choice of these particular girls was the peculiar mixture of fragility and courage I sensed in them. They were what you would call loners, who did not belong to any particular group or sect. I admired their ability to survive not despite but in some ways because of their solitary lives. We can call the class "a space of our own," Manna had suggested, a sort of communal version of Virginia Woolf\'s room of her own.

I spent longer than usual choosing my clothes that first morning, trying on different outfits, until I finally settled on a red-striped shirt and black corduroy jeans. I applied my makeup with care and put on bright red lipstick. As I fastened my small gold earrings, I suddenly panicked. What if it doesn\'t work? What if they won\'t come?

Don\'t, don\'t do that! Suspend all fears for the next five or six hours at least. Please, please, I pleaded with myself, putting on my shoes and going into the kitchen.

....

Looking back, I am amazed at how much we learned without even noticing it. We were, to borrow from Nabokov, to experience how the ordinary pebble of ordinary life could be transformed into a jewel through the magic eye of fiction.
= =

FT: The sportsman spy

The sportsman spy

Published: March 7 2008 23:47 | Last updated: March 7 2008 23:47

Moe Berg would have been 106 last Sunday, which makes this as good a time as any to recall the most remarkable sportsman I have heard of.

In a second-hand bookstore in South Carolina, I recently chanced on an old biography: Moe Berg: Athlete, Scholar, Spy. Reading it, I kept thinking, “No way!”. My apologies to any American readers who already know all about Berg but everyone should hear about him.

Born to Jewish immigrants in New York in 1902, Berg grew up in Newark, New Jersey. Though poor, he graduated magna cum laude from Princeton. The university offered him a teaching job but, instead, he joined the Brooklyn Dodgers baseball team. On road trips Berg would sit in bed in a Japanese kimono and straw hat, engulfed by newspapers in many languages. “Don’t touch them! They’re alive,” he would instruct puzzled team-mates.

After his first season he went to the Sorbonne to study philology. His Dodger room-mate thought it madness: “Hell, Moe, don’t you know what Paris is for?” But the evolution from medieval to modern French always fascinated Berg. He also practised as a Wall Street lawyer in off-seasons and wrote an essay on baseball that Albert Einstein admired.

Within baseball, Berg usually hid his erudition. He enjoyed speaking as ungrammatically as his team-mates, with their double negatives. He joked: “I spend years attempting to master a number of foreign languages, and what happens? I turn out to be a catcher and am reduced to sign language on the ball field.” He was an excellent catcher too – “good field, no hit,” in one coach’s semi-literate verdict. From 1931 to 1934, Berg went 117 games without an error, while also contriving to be in Berlin the day Hitler became chancellor. He saw then there would be war.

Perhaps he was already spying then. Perhaps he began in 1934, while touring Japan with Babe Ruth and other major league players. Tall, dark, handsome and a great dancer, Berg excelled at diplomatic receptions, and he chatted to Emperor Hirohito in Japanese. He also made a secret film of Tokyo that years later would aid American bombers. But he loved Japanese, which he worked to equip with an “L” sound.

It saddened Berg that in his 16 years in the major leagues, his father never once watched him play. The old man despised his main career. Indeed, Berg was often asked why he played baseball when he could have done anything. “Even grandmothers,” he replied, “should experience the pure excitement of covering home plate with an ape charging home, cleats flying high.”

Most players had a baffled fondness for Berg. Ted Williams, a team-mate in Boston, said: “I never saw a show like that and Moe never knew he was performing.”

“A mysterious guy all his life,” recalled the pitcher Lefty Gomez. “He was always coming from some place or other. No one knew where he lived or what he did with his time.” Suddenly he’d pop up discussing Sanskrit verb forms with the British politician Anthony Eden.

Berg stopped playing in 1939, after 663 games, just in time for war. In 1942, he addressed Japan on the radio in Japanese, urging peace. “What basis is there for enmity,” he asked during a personable yet erudite talk, “between two peoples who enjoy the same national sport?” Some Japanese wept to hear him.

He began spying for the Office of Strategic Services. The authors of Moe Berg had wonderful access to OSS documents and his former colleagues. They describe Berg infiltrating Yugoslavia, occupied France or Norway, carrying cyanide to swallow if captured. But gradually he grew obsessed with the German atomic project. Only if Germany got the bomb could Hitler still triumph. When Berg discovered that Congolese uranium ore had reached Duisburg in Germany, Allied bombers flattened the town.

In wartime Italy and Switzerland, he interviewed physicists on Germany’s atomic progress. One Italian physicist, tight-lipped at first, finally spoke after Berg spent three days with him discussing the poet Petrarch. In Florence, Berg visited a munitions plant dressed as a German officer. Eventually he pinpointed the exact spot of Germany’s main atomic facility.

In December 1944, he lured Werner Heisenberg, leader of Germany’s atomic project, to give a talk in Switzerland. Berg attended, armed. The man who couldn’t bear the sight of blood was to shoot Heisenberg if he learnt that Germany was near to producing the bomb. In conversations, Berg overheard Heisenberg make remarks such as: “We’re losing this war but how nice it would have been if Germany had won.” It seemed Germany wouldn’t get the bomb. Churchill and Roosevelt were briefed.

Postwar, Berg refused America’s Medal of Merit and even refused to claim his expenses from the OSS. After that he either barely worked or just took secret missions. Certainly he spent weeks on end living with friends or years with siblings, filling their houses with books and “live” newspapers until they kicked him out. He never married nor apparently had girlfriends.

His brother compared him to the medieval dons who founded Oxford and Cambridge: “Their sole objective was to gain knowledge for knowledge’s sake without intent to apply it.”

In old age Berg studied Mandarin. He met President Kennedy, who said, “Moe, baseball hasn’t been the same without you.” He died in Newark in 1972, just after asking: “How did the Mets do today?” They won.

‘Moe Berg: Athlete, Scholar, Spy’ by Louis Kaufman, Barbara Fitzgerald and Tom Sewell (Ballantine)